AP Chambers Opposes New GST Slab Proposal

Date: December 20, 2024
Category: GST Recent News
Read Time: 4 Minutes

The Andhra Pradesh Chambers of Commerce and Industry Federation (AP Chambers) has urged the GST Council to reconsider the introduction of a proposed 35% GST slab for certain products. In a letter to GST Council Chairperson Nirmala Sitharaman, the Chambers highlighted concerns about the potential negative impact on businesses, consumer demand, and overall economic growth.

Key Concerns Raised by AP Chambers

  1. Adverse Impact on Businesses and Consumers

Higher tax rates could reduce consumer demand, especially during economic stress.

Businesses may face reduced revenue and increased operational challenges, potentially leading to job losses.

  1. Contradiction to GST Simplification Goals

The proposed 35% slab contradicts efforts to simplify GST and rationalize tax rates.

A complex tax structure may lead to:

Increased evasion and litigation.

Growth of parallel economies, including smuggling and illicit markets.

  1. Counterproductive Effects

India already has a high GST tax structure, with 28% as the top slab.

Introducing newer and higher slabs may:

Discourage compliance.

Reverse gains made in formalizing the economy.

AP Chambers’ Recommendations

Retain the existing GST structure and focus on rate rationalization instead of introducing new slabs.

Prioritize taxpayer compliance and transparency to foster long-term economic growth.

Avoid measures that may disrupt the virtuous cycle of formalization and growth achieved under GST reforms.

Conclusion

The AP Chambers’ stance underscores the delicate balance between revenue generation and economic stability. With the GST Council’s 55th meeting approaching, the government faces a crucial decision on whether to pursue rate rationalization or introduce higher tax slabs. Stakeholders across industries will be closely watching the Council’s decision and its implications for businesses and the economy.

Tags: GST Council, AP Chambers, GST Slab Rates, Economic Growth, Business Impact

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